Polish government to take over PGE nuclear company

5 October 2020

The shareholders of Polska Grupa Energetyczna (PGE EJ1), which was set up to build and operate Poland’s first nuclear plant have signed a letter of intent with the State Treasury to acquire 100% of its shares. The shareholders of Polska Grupa Energetyczna (PGE EJ1), which was set up to build and operate Poland’s first nuclear power plant, on 1 October signed a letter of intent with the State Treasury to acquire 100% of its shares.

If the deal is completed, the government will have full control over PGE EJ1 by the end of the year. The Letter of Intent was signed by the Government Commissioner for Strategic Energy Infrastructure Petr Naimski on behalf of the State Treasury and representatives of the four state shareholders of PGE EJ1 - Polska Grupa Energetyczna (PGE), which owns 70% of the shares, Enea, KGHM Polska Miedz and Tauron Polska Energia, each of which owns 10% of the shares.

The document encourages each party to take all the steps necessary to prepare and complete the transaction. The intention  is that the State Treasury will acquire all PGE EJ1 shares on 31 December.

In a statement, PGE noted: "The letter of intent does not entail an obligation for the parties to complete the transaction, and the decision to execute it will depend on the outcome of the planned negotiations in this regard and the fulfilment of other conditions specified in legal regulations or corporate documents."

PGE President Wojciech Dabrowski said: “The energy industry is currently undergoing a deep transformation, and such large investments in a nuclear project exceed the financial capabilities of energy companies. That is why today we are signing a letter of intent with the State Treasury to begin negotiations on the possibility of the government accepting the entire investment in the first nuclear power plant in Poland. " He added: “In terms of the rapid development of renewable energy sources and the phasing out of conventional energy, nuclear power will be an important element of an energy system based on low and zero emission production.”

Poland's draft energy policy until 2040 envisages a transition to nuclear power with a target of 20TWh of electricity from nuclear by 2035. The commissioning of the first reactor with a capacity of 1000-1500MW is planned for 2033, five more such units will be commissioned with an interval of 2-3 years. Poland is currently heavily dependent on coal.

PGE EJ1 was founded by PGE in January 2010 as a limited liability company. In September 2014, Enea, KGHM Polska Miedz, Tauron Polska Energia and PGE entered into a shareholder agreement. PGE EJ1, which operates as a subsidiary of PGE, is currently focusing on the preparation of an environmental impact assessment for a nuclear power plant project. Location and environmental studies are also ongoing in the two locations under consideration: the coastal areas of Kopalino and Zarnovets. Completion of work on these reports is scheduled for the second half of 2021.

Also on 1 October, companies from the PGE Capital Group signed a General Agreement with PGE Polska Grupa Energetyczna SA This will allow for a more effective implementation of the business strategy, strengthening the PGE brand, and increasing the benefits of cooperation between the companies in the Group. In order to meet the changes planned by the Ministry of State Assets and concerning the improvement of management of capital groups, the PGE Group decided to conclude a General Agreement, the parties to which are PGE Polska Grupa Energetyczna SA and over 30 companies from the PGE Capital Group. The companies joined the Agreement voluntarily, thus confirming their agreement to achieve common goals included in the PGE Group's strategy.

Dabrowski said the General Agreement will increase the efficiency of management in the PGE Group and will streamline the flow of information within the Group. “It will strengthen our market position and will positively affect the benefits of cooperation between PGE Group companies, which is particularly important when implementing the assumptions of the new PGE Group strategy.”  The agreement does not require changes to the statutes or agreements of PGE Group companies. It took place through the submission of declarations of will by authorised company representatives. The General Agreement was concluded at a meeting of the PGE Group Holding Council, which was established in June to strengthen the supervision over individual segments and companies in the PGE Group. It also performs advisory functions, defines potential risks and recommends solutions as a result of the exchange of information and experiences in the Council.

Photo: The shareholders of Polska Grupa Energetyczna (PGE EJ1) have signed a letter of intent for the State Treasury to acquire 100% of its shares (Credit: PGE)

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